Bill Gross Gets It

Last night, when breaking the Buba repatriation story, we summarized it simply as follows "in brief: this is a momentous development, one which may signify that the regime of mutual assured and very much telegraphed - because if the central banks don't have faith in one another, why should anyone else? - trust in central banks by other central banks is ending." We are happy that the implicit message is so clear that everyone now gets it, including Bill Gross:

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But the amount of cash or paper equivalent dollars dwarfs gold at current prices. US gold is worth much less than a trillion right now. There are hundreds of trillions in derivatives, bonds, cash. If that paper collapses they lose their asses, even with gold going to $5,000 and ounce...

You are thinking about this from this side of the collapse, where currency still has relative value (or appears to). When paper dies and gold takes its place, the transactional value of gold will expand dramatically. You will be able to buy far more with an ounce of gold then than you can today. There will be no paper currency of worth any more. Everything will be valued against another standard, namely gold, in this scenario. Bingo, instant immense wealth for gold owners. Wealth that could potentially dwarf paper-based fortunes, since relatively few will have accumulated large gold holdings.

and at that time it will be owners of gold and other physical, non-vaporized assets who will have the responsibility of reforming society. When the government tries to get it , it will be up to us to ensure the new politicians understand the fundamentals of private property that once made America great.

So often one hears that 'they ' will not allow this or that. In the future 'we' will be 'them'.

With all due respect, that is an idiotic argument that smacks of historical ignorance and an unwarranted faith in the omnipotence of government, if not actually siding with the status-quo PTB.

PLENTY of governments have printed their (fiat) currencies into utter worthlessness and still survived --- the government of Weimar Germany never fell during or after the German hyperinflation of the 1920s, for example, nor did the governments of Mexico in the early 1990s or that of Russia at around the same time. Fuck, even Mugabe and his central bankster Printmaster in Chief, Gideon Gono, are both STILL in power in Zimbabwe despite the ruinous hyperinflation there a few years ago. And I could go on and on. Suffice it to say, you don't know what you are talking about.

I share your opinion. At the very least, I do not disagree that your opinion could be correct. So, the way I see it, they are not the only ones that can play that game. They arent the only ones that can take their fiat currency and buy cheap gold and silver.

The Fed will just hire Lance Armstrong to bullshit the world for another decade or so.

Armstrong: Gold, yea we got your gold. We never touched it. It's been sitting there all along. We've heard these accusations for years. After returning the world to economic stability after the last near collapse why would we even need to mess with the barbarous relic? That would be stupid!

all these guys know what the others are doing since they are all doing the same thing. this gold repatriation thing(chavez was first)is a clear indication that there is a fear of collapse so the prudent path is first mover because last mover will find an empty vault. now, the big first move will be to jump off the ponzi train into a trillion dollar coin vehicle(state money instead of central bank money a la hitler, kaddafi, jfk and lincoln. my bet is on japan.

What does Gross get? "The Central Banks are run by a bunch of assholes, all they do is give money to the bankers so they can speculate, running assets up in BRICs." But this does not raise interest rates on bonds! F...ken bankers"

They trust eachother for having compounded the price discovery mechanism into the ground thats for sure ! . The one who deviates first from this so called "game-theory" does it best, so having some Weimar-DNA in that good ol' wirstschaftswunderbank aka the Bundesbank might be a key asset on their balance sheet :-).

Nonsense! Vat about Merkels Election in November!!!! Zee rothchilds cannot play sat card card just yet!!!! Zen must first secure zee political ground..... Only after nov 2013 can brobama use all of those bullets he ordered on us....

I think the truth is they don't trust each other AND the Germans are making sure THEIR gold is 100% certifiably authentic. I mean China could claim to have a billion tons but 75% might be gold foil covered chocholate bars

I have no other way to purvey my conviction tptb will never tolerate any notion of allowing equality, allow equal footing or equal terms to diminish their, demonic, power.

tptb will kill half the men, and women if they must, on this planet to maintain the status qou.

I am a student of history, ground down by the years of struggle to maintain a warm and dry place to sleep and a warm meal. To fantasize otherwise has only been folly. Life is not fair. Some are more equal than others. To try and honestly match a cheater will always end in ruin.

When you rule out violence and dishonesty you will spend your life reckoning with entropy.

I have resigned myself to my fate. To, try and, feel blessed for what I have and not bitter for what I lack.

Well of course, knowing the game and making the rules as they go along again, they know all the other kids aren't to be trusted inherently.

I can't believe we're living through the world's first quasi-global reserve currency collapse and as it's taking a really long, grinding time I have to say, I'm a little dissapointed so far. People like us want to see Rollover, not The English Patient... ;)

"..Any gains by the large middle and lower classes will tend to be short term and illusory, involving more household balance sheet problems and debt until the system is reformed. Some of this has to do with a policy bias that considers the vast mass of the people as consumers, but not as workers.

Merely adding more financialized money into an unreformed system will further compound the problems, and ultimately force a more significant crisis and change. This is true whether done does it via more debt issuance or flashier gimmicks like modern monetary totems.

The underlying social tensions can only be ignored by the comfortable for so long. As a corollary, applying austerity without reform is insanely self-destructive. The proof of this is forthcoming.

Japan has been able to hold their system together for a protracted period of slack recovery due to their demographics, their industrial policy position in the world economy, and a largely homogeneous and communal society that cares for its own. The US and the UK will have a shorter half life I am afraid.

The situation is Europe is a bit different, and likely to result in serious dislocations in their organizational fabric fairly soon if some of the problems there are not addressed. The monetary union without fiscal cohesion is inherently unstable. Only fraud allowed it to last as long as it did.

There is a possibility that the current policies in the US may succeed if austerity if not applied, and something happens in the currency war to affect the balance of trade. I am not optimistic So let's see what happens.

The UK may provide a good counter example to the US Some new school of economic thought may find some useful data from that, if they can free themselves from the 'say for pay' mentality that currently impairs the public policy discussion in a disgraced profession."
jca.
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15 January 2013
Money Supply Figures: Monetary Inflation But Real Economy Is Dysfunctionalhttp://jessescrossroadscafe.blogspot.com/2013/01/money-supply-figures-mo...

Aggregate demand is not stimulated because sufficient money does not reach consumers, as it passes through a corrupt and broken financial and political system, being diverted largely to insiders at 'the top.' Nothing could be more clear than looking at the statistics regarding income inequality.

There are a couple of power centers that need to be destroyed for a global empire to take hold under the control of a communist (its not really communism) dictator.

1. Congress, which has no credibility and by not exerting its power is being systematically neutered and destroyed. I wonder if they know that they are digging their own graves... they know too much to be allowed to stay around when the power grab comes into the open.

2. The banks. The banks will be blamed for making people poor through their greed. They will be sacrificed as well... and they do not realize that they are also digging their own graves. In reality the overspending (and other tactics) by Obama is destroying the people who could challenge the power grab.

Think Stalin. Think Mao. Think Hitler. IMO, When it comes, it will be brutal and those who think they are important and powerful will be purged. It is not the common man that should be most afraid. It is those who are not using their power now to stop it. The common man will at first applaud the purge ... then they will not.

Why are the Islamic countries being attacked? They are not within the circle of power and must be put under control, otherwise they could cause real problems, not just made up problems. I wonder if the media leaders will survive.

People are going to finally wake up and start buying gold and by then it will be $5,000+/oz (if there is any physical left). They'll use their cash, they'll liquidate assets for cash to buy, they'll trade, etc. and then the government will confiscate and give everyone $42.22/oz for their gold. Those who bought earlier will just have less of a loss.

Yes, EVERYONE is going to wait until the very peak price before buying gold, they'll liquidate ALL of their other assets to do so, and then the government WILL 'confiscate' (door-to-door) all of that gold, every bit of it, for all time.

Are you Jon Nadler?

Allow me to propose an alternative (and much more likely) scenario:

What's the use in buying stocks and bonds?

People are going to finally wake up and start buying stocks and US Treasuries and by then the Dow will be 25,000 and long-term interest rates will be 0.5% (if there are even any government bonds left). They'll use their cash, they'll liquidate assets for cash to buy, they'll trade, etc., and save it all for retirement, and then the government just will confiscate their IRAs and 401k accounts and give everyone a "guaranteed lifetime annuity" (that will yield a nominal 3%, and a real annual loss) for their investment savings. Those who bought earlier will just have less of a loss.

It is going to happen on a larger scale this time because it will be the Greater Depression.

You'll either turn in your gold and get something back that you can use to survive.

Or, based on your "principles", you'll go "illegal" and not turn it in. And then you'll just sit and look at it for the rest of your life all frustrated by the fact that you can't use it to buy the things you need to survive.

You sound like a typical, ignorant, conformist paperbug who is desperately trying to convince himself that his faith in government promises and government-issued paper is not misplaced, all the while subconsciously realizing that he is well and truly fucked unless he chooses to finally grow a spine and take action contrary to his government-sponsored programming.

German gold in FBNY
Bubba wants their gold.
FBNY nods and yawns, “Well then let’s figure out what we owe those Krauts.”
German gold, all official 3,396 tonnes
German gold, of which 45% is held in New York
3396 x 45% = 1528.2 tonnes

FBNY says, “Gee Willakers, looks like we have to buy some gold for Germany”, tallies the book value, goes to the Comex and places an order. Tells Germany that their contract order is in and will be held for delivery. Germany objects, complaining, “Ve have more than 49 million ounces of gold vith you! Und, you vant to pay us vith a mere 1.2 million ounces? Dis ist robbery!!”

FBNY responds, “Your gold has vaporized”.
Germany ends up with less gold, or receives delivery in GLD, or FRN’s. Lawyers or guns, bitchez??